Consumers desperate for relief from the scourge of sky-high gasoline prices won’t get it soon — at least, if the latest forecast from Goldman Sachs commodity analysts led by Jeff Currie is on track.
In an update to their outlook for oil prices over the next 12-18 months, the team at Goldman warned that they now expect oil prices — measured by the Brent crude international benchmark BRN00 — to rise to nearly $140 a barrel as early as this summer.
Goldman Sachs economists have predicted oil prices will surge to $140 a barrel this summer, with a drop in Russian production and a gradual recovery in Chinese demand adding to the pressure on already low supplies.
But they said consumers will feel as though oil has hit $160 a barrel, because a lack of capacity at refineries means gasoline and fuel prices are rising more than would normally be expected, adding to costs across the economy.
Oil prices have already jumped roughly 50% this year as a result of Russia’s invasion of Ukraine and broader supply and demand imbalances. High oil prices have pushed US gas prices to a record high of $4.92 a gallon, according to the AAA.
Brent crude, the international benchmark, and WTI crude, the US benchmark, traded at around $119 and $118 a barrel respectively Tuesday.
“A large spike in prices remains quite possible this summer,” Goldman Sachs strategists wrote in a report to clients.
The forecast suggests that the worst is not nearly over for consumers already dealing with high gas prices.
The national average price for regular gasoline jumped another five cents on Tuesday to a fresh record of $4.92 a gallon, according to AAA. That’s up by 30 cents over the past week and 62 cents in the past month.
“It’s driving me crazy. I’m looking at this thing right now — $5.99? Are you serious?” asked Cleavie Jordan, an MTA conductor filling up his tank in Manhattan.
Oil prices have already increased by roughly 50% this year as a result of Russia’s invasion of Ukraine and mismatches in supply and demand. As of Tuesday, Brent crude, the international benchmark, and WTI crude, the U.S. benchmark, traded at approximately $119 and $118 a barrel, respectively, while the nationwide average price for a gallon of gas hit $4.92.
Since consumer demand returned following a brief pandemic-driven decline in 2020, investors have pressured oil giants to suppress production to push prices higher. Last year, as average gas prices in the U.S. steadily climbed—reaching about $3.40 per gallon in December 2021, up from $2.10 a year before—25 of the world’s biggest fossil fuel corporations enjoyed a record $205 billion in profits.